EUROPEAN PAPERS ON THE NEW WELFARE

The demographic Situation now and in the Next 10 to 20 Years

It could be interesting to suggest another scenario in which the total number of the remaining years of your life could be kept constant. It is possible to measure the number of the years of life2 using the life table3. We will fix the number of years of life that people of the age of 65 expected to live in 1951. In this case the number of the elderly people would not undergo particular alterations. It could be interesting to have the same discussion about the problem of the stability of the welfare system; the remaining years, from a theoretical point of view can be made to correspond to the years of pension that the population must receive. This implies that the resources allocated to the pension system must remain steady, because this scenario is constructed on the basis of the constancy of the residual years of life. The consequence of this hypothesis would be that the number of elderly people and the ageing index would not change very much compared to those of 1951, but the threshold for ageing would rise to the age of 79 in 2020.

Table 10: the total expected years of life of the population aged 65 and over is fixed at 1951
cassani-tab10.gif
Source: own calculations based on the ISTAT database.

The results show overall that it is necessary to increase the pensionable age if we want to maintain the stability of the welfare system. It is impossible not to take into consideration the key question as to how future demographics will interact with the stability of the welfare structure.
The future ageing process involves change not only in the field of social security but also in the labour market. Another way to achieve a decrease in the pension expenditure would be to introduce the possibility of part-time work for the elderly. The aim of this scenario is to examine the changes at the end of the active years brought about by the introduction of part-time. This hypothesis has been based on several changes in the labour market as a consequence of the rapid ageing of the labour force; part-time employment would fit perfectly this part of the population. Gradual retirement is not very common. On the whole, the proportion of people working beyond standard retirement age is very low in all European countries and particularly in Italy.

Table 11: The population between 65 and 76 is supposed to work part-time
cassani-tab11.gif
Source: own calculations based on the ISTAT database.

Part-time jobs as a tool for the elderly to remain in the labour market after retirement will have a strong impact on the stability of the welfare system. In this last scenario, using the life table we can see how the introduction of this flexible contract could almost halve the social expenditure. Using the life table to calculate the years of life in 2000 we see that if we put the ageing threshold at 65 and we suppose part-time employment for the elderly from 65 to 76 years of age, we could almost halve the years of life requiring social expenditure.
We must remember these are oversimplifications but they show clearly the way in which the introduction of part-time jobs would positively affect the welfare system. All these theories are based on the assumption that every year of life corresponds to a year of pension expenditure. With the life table we can calculate how many years the welfare system will have to pay for these people. The image of demographic ageing changes radically. It is important to adjust gradually the economy and social policies to changes in the age structure of the population. The perception of the social status of the elderly is changing. In the near future the aim will be to transform something that today is perceived as a problem into a new resource for global wealth and social integration. In other words, the definition of ageing and the status of the elderly must be reconsidered and rethought; and at the same time social and economic policies will have to face the demografic situation: the lack of adequate interventions, measures and services to increase the employment of the elderly is in contrast with the demographic ageing that has been ongoing and which has been forecast to accelerate in the next 50 years.
All this involves paradoxical considerations but these show clearly, from the demographic point of view, that changing the 65-years threshold has become inevitable. On the basis of these considerations, it is important to note the existence of a large number of people over 65 years of age whose demographic evolution is consequently bound to shift, in the definition of the national statistical and economic system, from the contingent of the elderly to the contingent of the active population.

2 Years of life (Lx) average number alive between age x and x+1, or total years of life lived between x and x+1 by those who attain age x: Lx = (lx + lx+1)/2 = lx+1 + 0.5 dx (because dx = lx – lx+1) generally Lx = lx+1 + a dx. Cumulative sum of Lx (Tx) from all values of x up to the end of the table: total population aged x and over in a stationary population generated by constant births and subject to the life mortality table: Tx = Lx + Lx+1 +…+Lw-1.
3 The life table summarize the mortality experience of a population: it follows a generation of births from age to age throughout life, subjecting them to certain rates of mortality at successive ages and observing survivals at each age up to an upper limit beyond which it is convenient to regard the number of survivors as negligible.


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